Today’s Atari bankruptcy latest in a long history of corporate deaths

Legendary brand will continue even though corporate history is a mess.

On a semi-holiday like today's Martin Luther King Jr./Inauguration Day, the story of a venerable brand like Atari filing for bankruptcy is making a decent splash all over the media. Many of these stories are angling the story as an "end of an era" piece, the final "full stop" on a company that defined video games for a significant part of the '70s and '80s. While that's partly true, the convoluted history of the Atari brand shows just how little the current "Atari" has to do with the company aging gamers remember, and how enduring the brand continues to be.

The many deaths of Atari

The truth is, the company that bears the name "Atari" today bears surprisingly little relationship to the Atari that made a name for itself with arcade games like Pong and the Video Computer System (i.e. the Atari 2600) back in the '70s. That company, Atari Inc., was founded in 1974 by Nolan Bushnell and featured employees like future Apple Computer luminaries Steve Wozniak and Steve Jobs.

Atari was purchased by Warner Communications way back in 1976, and the video game giant grew to become a huge part of the massive Warner corporation over the coming years—until the video game crash of the early '80s. This marks the first time that Atari "died," as Warner split the company up and sold it off for parts in 1984.

The portion of the original Atari responsible for arcade games was split off into a new company, Atari Games Inc., which went on to make well-remembered "Silver Age" arcade classics like Gauntlet, Marble Madness, Paperboy, and San Francisco Rush. Atari Games was repurchased by Time Warner Interactive in 1993 and was then transferred to WMS Industries in 1996, which renamed the company Midway Games West.

The arcade industry continued to decline in the US, though, and Midway Games West was finally disbanded in 2003, the third or fourth time Atari "died" (No, I didn't skip the second time... keep reading). The rights to Atari's arcade output from 1984 through 2003 were transferred to Warner Bros. Entertainment in 2009; you should bug them if you want a new version of Klax or something.

Today's bankruptcy has to do (loosely) with the other branch of the original Atari, responsible for home hardware and software (and control of the rights to the company's pre-1984 arcade classics, like Pong, Centipede, Breakout, Asteroids, and Missile Command). This bit of the original Atari was sold to Commodore founder Jack Tramiel in 1984, meaning that, in a way, the maker of the relatively niche (for gaming purposes) Commodore 64 actually triumphed over the market-dominating Atari 2600 in the end.

Starting in 1984, Tramiel tried to revive the Atari brand with hardware like the Atari ST computer, the Atari Lynx portable game player, and the Atari Jaguar home console. When all of these efforts failed (somewhat disastrously, in the case of the Jaguar), Atari died its second "death," with the pieces getting sold off to little-known Hasbro Interactive in 1998. This incarnation of Atari was responsible for the surprisingly decent revamp Pong: The Next Level on the original PlayStation and other platforms.

Meanwhile, a company named GT Interactive, founded in 1993, was busy publishing games ranging from Doom II, Unreal, and Duke Nukem 3D expansion packs to PlayStation franchises like Driver and Oddworld. Following a brief downturn for GT Interactive, French conglomerate Infogrames Entertainment, SA, bought the company in 1999. Infogrames then bought a controlling interest in Hasbro Interactive (including the remnants of the failed Atari Inc.) in 2001, arguably marking a third "death" for Atari as it existed under the Hasbro banner.

Stay with me now. At this point, GT Interactive began publishing games under the "Atari" label, though the developer was officially known as Infogrames Interactive. It wasn't until 2003 that the French parent company realized that no one knew or cared what "Infogrames" was. So Infogrames renamed the whole company to "Atari Inc.," and renamed Infogrames Interactive (née GT Interactive) to Atari Interactive in 2003.

The death of today's “Atari”

The new Atari Inc., as it existed in the 2000s, was a multiheaded beast that at points encompassed a huge variety of unrelated companies and franchises. It controlled the Civilization series until 2004, when it sold it off to Take-Two Interactive for $22.3 million. Earthworm Jim and MDK maker Shiny Entertainment became part of Atari Inc. through a buyout in 2002, before it was sold off again in 2006. Atari bought City of Heroes maker Cryptic studios in 2008, before selling it off in 2011.

Things got so convoluted that, at one point, the 2001 PS2 remake of Spy Hunter was developed by Atari Inc. subsidiary Paradigm Entertainment and published by Midway Games, which controlled the dying remnants of the original Atari's arcade division. Never mind that the original Spy Hunter had nothing whatsoever to do with Atari.

It's a bit hard to follow, but all of this is just a long-winded way of showing how little the current "Atari" has to do with the original company that made the name famous. The French company that currently sports the name didn't even exist when Atari was founded and only got the name through a complicated series of acquisitions of the less successful home-console half of the original company. None of the people involved with the original Atari are part of this new company's DNA in any way, shape, or form. Interestingly though, original Atari founder Nolan Bushnell joined the new Atari's board of directors in 2010, through investor Blubay holdings.

Today's bankruptcy filing reflects the weakness of this new, largely unrelated company more than the weakness of the legendary Atari brand. All those acquisitions and sales mentioned above are just the tip of the iceberg as far as the French company's flailing lack of focus in the last decade or so—and a large part of why it hasn't shown a profit since 1999. In fact, the US branch of Atari is filing for bankruptcy today largely to escape the debt-ridden French parent company that is holding it back, according to a press release.

Though this is the fourth or fifth death for "Atari" since 1974, depending on how you count, the name will doubtlessly live on. The Atari brand and logo still hold real nostalgic power, and they are recognized by 90 percent of Americans, according to a recent survey. In fact, 17 percent of Atari's US revenues reportedly come from licensed products sporting the Atari logo or name, according to an LA Times report. The company has been milking the nostalgia extra hard recently, with mobile hits like Atari's Greatest Hits, Breakout: Boost, and Asteroids: Gunner.

Sure, Atari hasn't had a new, homegrown hit franchise since Roller Coaster Tycoon (developed and scooped into the Atari umbrella during the Hasbro Interactive days), but the company's name recognition and stable of legendary brands pretty much ensures it will exist in some form for years to come. But let's be clear: "Atari" as it currently exists is just a holding entity for a brand devoted almost entirely to nostalgia, with no core business legacy or history tracing it to the people behind the original company. This makes it decidedly different from classic gaming names like Nintendo or Sega, which have gone through changes but maintained their core structure and corporate memory over the decades.

In other words, don't mourn for Atari today... it's already dead. And yet, at the same time, it will live on, probably forever.

What's also worth mentioning in the Atari history is the birth of Tengen. After Atari and "Atari Games" (the arcade division) split into two companies, the latter was not legally allowed to use the Atari name in the console market. They therefore ported their arcade titles under a new name, Tengen - said name is also related to the Japanese game Go which inspired Atari's name.

Tengen was most famous for being in a HUGE legal battle over their "unlicensed" version of Tetris and subsequent releasing of NES games without a license from Nintendo. They also released the greatest sports game of all time (full disclosure - I may be biased since I have a website for said game), RBI Baseball.

Just wanted to add that the Atari ST had a massive impact on the music industry and you'd find one in most - if not all - recording studios in its day. Someone else was right to point out that their legacy wasn't restricted to games and gaming consoles.

68 Reader Comments

I just haven't seen anything good under the Atari brand in years, so I'm skeptical that anything much will improve that record. It'd still be nice to see them start developing again, but since their latest efforts include a Pong remake with Zynga, things are not looking promising.

Good piece Kyle, it's interesting to see how convoluted Atari's history is.

Kinda disappointed by the lack of mention of Atari computers like the ST and such. The original Atari company did more than just video games, they were also one of the pre-IBM-era personal computer vendors.

Good piece Kyle, it's interesting to see how convoluted Atari's history is.

Kinda disappointed by the lack of mention of Atari computers like the ST and such. The original Atari company did more than just video games, they were also one of the pre-IBM-era personal computer vendors.

Good piece Kyle, it's interesting to see how convoluted Atari's history is.

Kinda disappointed by the lack of mention of Atari computers like the ST and such. The original Atari company did more than just video games, they were also one of the pre-IBM-era personal computer vendors.

I actually did mention the Atari ST briefly. But Atari hasn't been a computer company for roughly two decades now. The brand continues to have influence in gaming circles, though.

Good piece Kyle, it's interesting to see how convoluted Atari's history is.

Kinda disappointed by the lack of mention of Atari computers like the ST and such. The original Atari company did more than just video games, they were also one of the pre-IBM-era personal computer vendors.

Atari was my favorite company growing up. I had an Atari 800, 130XE, Mega ST4 and dreamed of getting an Abaq Transputer (I also wanted a TT030 but kept waiting for a better version to come out -- was disappointed with the form factor of the Falcon030). Computers back then were exciting -- lots of neat and interesting hardware from competitors (Commodore Amiga, Coleco Adam, Timex Sinclair etc.). Just an exciting time to be a computer enthusiast.

If I were a bazillionaire, I would buy the Atari name and produce computers again.

Atari was only Atari in name. As a company the REAL Atari died when Nolan Bushnell sold the company and walked away. This incarnation of Atari never achieved anything close to what Atari did in the 70's and 80's. This company lacked any kind of the ingenuity and creativity needed to produce truly good and fresh games.

When I was studying computer sciences in Lyon, about 8 years ago, I remember going to a forum held by video-games companies, where they mostly explained what kind of jobs one could hope to apply for and what kind of studies were recommended to be hired. Infogrames aka Atari being headquartered in Lyon, some representatives went to speak to us. I still have a terrific memory of one them flatly telling us that being reasonable businessmen, they couldn't take any risks, and, when it came to sell and marketing the games, he didn't think it was much different than marketing groceries, common household items and so forth. After that I knew they were bound for failure, which is what happened. And I also vividly remembers that back then, even EA took risks from time to time (eg The Sims).

I'm confused. Is this the Infogrames' Atari that is now dead? There were too many different iterations for me to keep track. We need one of those aquisition charts like the one for Ma Bell to be able to accurately picture this.

What's also worth mentioning in the Atari history is the birth of Tengen. After Atari and "Atari Games" (the arcade division) split into two companies, the latter was not legally allowed to use the Atari name in the console market. They therefore ported their arcade titles under a new name, Tengen - said name is also related to the Japanese game Go which inspired Atari's name.

Tengen was most famous for being in a HUGE legal battle over their "unlicensed" version of Tetris and subsequent releasing of NES games without a license from Nintendo. They also released the greatest sports game of all time (full disclosure - I may be biased since I have a website for said game), RBI Baseball.

Eh, I am right or Atari published some good rpg's in last year? (Neverwinter Nights, The Witcher?)

More accurately they smacked in terrible anti-piracy methods into Neverwinter Nights that forced a lot of paying customers to use pirated exe's just to play their games. I guess you could argue that was better than what EA did with Bioware.

Still this isn't the Atari that caused Nintendo to come up with their Seal of Quality. There have been a few decent games that have existed under this name (NWN wasn't otherwise bad) though I've never really cared for them using the Atari name like it means anything.

Then again I feel about the same way about Sega. Since they've left the console selling market I haven't felt anything come close to what I liked about the Genesis days.

As someone who was an Atari fanboy way back when, this news doesn't phase me. While the name has changed hands many times, there was at least some sort of direct lineage for 20 or so years. But by the time of the Infogrames acquisition, any "connective tissue" to the Bushnell/Warner era was long gone.

Atari, the undead of the video game world. It dies 1000 deaths and keeps getting back up out of it's grave. I just found some Atari stickers in my closet last night while I was cleaning it out. I stuck them to the back of my cat. Good times.

I don't think you can really say Atari "died" in the early 80's. As someone who owned a 2600, Atari 400 (with the flat keyboard) 600XL, 130XE and eventually a 520STe, I see them as being all from the same company along with many other Atari fans. I'm not quite old enough to remember Pong in the arcades, but do remember virtually every other Atari arcade game.

I also remember many games published by "Atari" in the mid-80's that were not actually available on an Atari machine, and that company was never really considered the true Atari. The last thing Atari really ever did, was make the Jaguar.

Oh, and for the record, I'd hardly call the Atari ST unsuccessful. It finally succumbed to the Amiga and then PC, but any self respecting electronic musician from 1986 onwards, had an ST. Me included. In the late 80's it was pretty popular.

Kyle Orland / Kyle is the Senior Gaming Editor at Ars Technica, specializing in video game hardware and software. He has journalism and computer science degrees from University of Maryland. He is based in Pittsburgh, PA.